Ultimate Blockchain Nodes Guide: What Is It and How Does It Work?

Blockchain technology powers everything from cryptocurrencies to decentralized applications, but at the heart of it all lies a crucial component: the node. Whether you're a developer, investor, or tech enthusiast, understanding what blockchain nodes are and how they work is essential to grasping the mechanics of decentralized systems.

Please sit down and make yourself comfortable. In this guide, I'll discuss:

• What nodes are
• Why nodes are important for blockchain
• Different types of nodes
• Main functions of nodes
• Difference between nodes, clients, and miners
• Advantages for node owners
• Possible sources of income
• Possible expenses
• How to launch and maintain a node
• Features of launching nodes in the testnet

So, let`s start!

What are nodes and why are they important for blockchain?

Blockchain is a type of distributed database that contains information about all transactions made by participants and consists of a chain of sequentially linked blocks.

Copies of this registry are stored on various devices that are synchronized with each other, ensuring the decentralization of the system. This fundamentally distinguishes blockchain from centralized networks that operate on a client-server basis.

Nodes are the devices that store copies of the blockchain and add blocks with new transactions to the chain as part of the consensus mechanism.

Technically, nodes consist of:

• Hardware — a virtual or physical server, as well as mining equipment;
• Software that allows the node to interact with other nodes and correctly perform its assigned functions.

Depending on the requirements of the blockchain, a node can be deployed using a personal computer, as well as a rented virtual (VPS) or dedicated server with a powerful configuration.

Important. For any blockchain, a node is a basic structural unit. Without independent nodes, the very existence of a decentralized network is impossible, so project teams often encourage the launch of nodes in the early stages of development.

Main functions of nodes

A blockchain can include several types of nodes to solve different tasks. We will discuss this further. Still, the core of the network is the class of full nodes, which perform the following functions:

• Block verification. Miners or validators are responsible for processing transactions and forming blocks, but each full node in the network must verify the formed block and add it to its copy of the database or reject it. This is why the implementation of hard forks affecting the basic parameters of the blockchain requires the consensus of the majority of nodes — those who disagree will not be able to verify transactions that comply with the new rules.
• Storing transaction history. Nodes record and store complete or partial information about transactions on their storage devices. Depending on the size and degree of decentralization of the blockchain, there may be several dozen, hundreds, or even thousands of such copies, which virtually eliminates the irretrievable loss of data about the state of the network.
• Data retransmission. After a node has verified and added a block to its copy of the database, it can broadcast this information to other nodes to ensure network state synchronization and database integrity. The retransmission function is an important part of the blockchain security mechanism and allows new nodes to access data without permission.
• Connecting to the blockchain. All actions on the network, whether it's starting a transaction or calling a smart contract function, are done through nodes. So, in the early days of Bitcoin, only full node owners could interact with the network. Later, infrastructure providers appeared, offering their nodes as a channel of access to the blockchain for light clients and other users.

Note. Storing an ever-growing database is becoming a problem for many projects, as it increases the technical requirements for node deployment. For example, as of June 2025, more than 1.3 TB of free space is required to synchronize a full Ethereum node. And these requirements increase significantly if you need to run an archive node with a complete history of the network status. For example, the Near archive node occupied 28.4 TB in March 2024 and more than 29.1 TB in August. You can calculate this yourself by executing the commands specified in the official Near Discord channel.

All basic nodes perform these tasks, but to better understand how blockchain actually works, let's take a closer look at all existing node types and their functions.

Types of nodes

In addition to the basic functions listed above, nodes may be assigned additional tasks that require special configuration or software, so the blockchain architecture is in fact a network of interconnected nodes with different functions.

Depending on the tasks performed and the configuration, nodes are divided into several categories.

Light nodes

Light nodes store only partial transaction data, so they cannot verify blocks on their own and must rely on full nodes when synchronizing the database. Of the basic functions listed above, they can only fully provide access to the blockchain, so they are often installed by users who do not want to rely on third-party infrastructure when interacting with the network.

The main advantage is low technical requirements and easy startup. Light nodes are supported by almost all blockchains.

Full nodes

Full nodes, unlike lightweight nodes, store the entire transaction history, which expands the possibilities for interacting with the blockchain. At the same time, such devices are divided into several subcategories:

• Pruned full nodes also store transaction history, but only partially, for example, the last 20 GB. They can be used as a compromise solution by users who want to get more functionality than a lightweight node, but do not want to pay for maintaining a full database. Such nodes are supported by Bitcoin, Ethereum, and many other networks.
• Archived full nodes. They store the complete transaction history for the entire existence of the network. Access to the complete database allows such devices to be assigned additional functions, so they can be used to run:
  • Miner nodes. These are responsible for processing transactions and forming blocks in networks based on the Proof-of-Work (PoW) consensus algorithm. Unlike standard full nodes, mining nodes are equipped with the computing power necessary for hashing transactions. Examples of such devices are ASICs. The most popular networks for launching mining nodes are Bitcoin (with a high entry threshold), Dogecoin, Litecoin, and Ethereum Classic (with a lower entry threshold). Mining requires powerful equipment, as its purpose is to solve complex algorithmic problems. The more powerful the equipment, the higher the chance that the miner will solve the problem first and find the block for which the reward will be paid. To increase the probability of mining a block, some participants combine their equipment into a mining pool.
  • Staking nodes. These perform the same function as mining nodes, but in networks based on the Proof-of-Stake (PoS) consensus algorithm. In this case, the reward is not for mathematical calculations, but for blocking coins in the validator's account. Accordingly, you do not need to buy/rent expensive equipment to launch a validator node. To launch them, you need to stake a certain amount in the network's native tokens. Thus, anyone can launch a validator on the Ethereum network by locking 32 ETH.
  • Authority nodes. These are analogous to validators for networks that operate on the Proof-of-Authority algorithm and its derivatives. Such nodes are allowed to process transactions based on reputation alone. That is, it is not enough to simply buy equipment, as in the Bitcoin network, or lock assets, as in Ethereum. You need to obtain the approval of the community, for example, through a voting process.
  • Masternodes. Unlike the examples above, they do not form blocks but can perform other tasks. The specific rights and configuration of masternodes vary from blockchain to blockchain. For example, in the Dash network, only masternodes can conduct instant and private transactions. The requirements for masternodes are usually higher than for full nodes and may also include staking a certain amount.

There are also two categories of nodes that do not belong to the general hierarchy:

• Supernodes. They are classified in various sources as a type of full node or masternode with additional functionality. Supernodes can be more powerful than standard full nodes, which allows them to provide higher throughput or perform special functions. Nodes of this type are mainly used by relatively small blockchains such as Graft and are not widely used because they reduce the decentralization of the network.
• Lightning nodes. Nodes in the Lightning Network (LN) are special nodes used by the LN Bitcoin micropayment network. These nodes allow direct payment channels to be established between users and also participate in the transaction routing process.

It is worth noting that not all nodes are available for free deployment. While a full node or validator can be deployed without permission, a masternode or authority node requires permission to run.

Nodes, clients, and miners: what's the difference?

In various guides, the terms node, client, and miner may be used interchangeably. In some cases, this substitution is justified by the context, but more often than not, it causes confusion and misleads beginners. So:

• Node is a computer connected to the blockchain with software that is used to access the registry, synchronize, and store transaction history.

• Client is the software that is installed on the server. The client can change the node configuration, optimizing it for specific purposes. For example, the Ethereum network has clients such as Geth (the most common), Nethermind, Besu, and Erigon. When installing any of them, the user launches a node, but this node will work differently. The difference also lies in the configuration of the consensus mechanism. The most popular consensus clients are Prysm and Lighthouse, followed by Teku, Nimbus, and Lodestar. Node configuration also depends on the type of synchronization and other parameters. In non-EVM-compatible networks, the situation with clients is different and there is no such variety. Projects usually provide one client and one set of network configuration parameters.

• Miner is a special category of nodes in PoW-based blockchains that is responsible for processing and hashing transactions. That is why a mining node includes computing power in addition to a standard server: GPU, CPU, or ASIC. A miner is by definition a full node, but not every full node performs the functions of a miner.

  
  

By the way, you may wonder what are oracles. Oracles are nodes that transmit information from external systems to the blockchain. An example of such data could be the current value of currencies for a blockchain-based exchange service. A script oracle is needed to convert the information into a form that is understandable to a smart contract. The validator then verifies the data from the oracle along with all other information in the blockchain. At the same time, the signal from one oracle is verified by a large number of validators, which increases the overall security of the network.

What are the advantages for node owners?

As a rule, when people talk about the advantages of running their own node, they mainly mean earning money from processing transactions. However, deploying a full node can provide a number of additional advantages when interacting with the blockchain. These include:

• Direct access to the network. When launching a full or light node, the user gets their own infrastructure for interacting with the blockchain and no longer needs to rely on third-party service providers. All wallets interacting with the network can be connected to your node, avoiding overloads and failures during increased activity on public nodes.

• Privacy. Another bonus of switching to your own infrastructure is privacy. Some RPC providers collect information such as IP addresses, which allows them to track connections between wallets and the user's physical location.

• Secure storage of private keys. Private keys from wallets running on your own node are stored on the hard drive of that node, eliminating the need to trust third parties. At the same time, compared to devices on which non-custodial wallets are usually installed, it is more difficult for attackers to gain access to a full node if basic security principles are followed when working with the server.

• Testing platform. Deploying a node opens up opportunities for secure and flexible testing of smart contracts and decentralized applications (dApps) without the need to involve the main network. This allows developers to work in a real blockchain environment while maintaining control over the confidentiality and isolation of the project in its early stages. Launching on a test network minimizes gas fees and provides an opportunity to engage the community in bug detection. In addition, having a working version of the product allows you to demonstrate its functionality to potential investors and partners, increasing confidence in the project.

  
  

As you can see, even without financial incentives, in some cases, launching a node can be the optimal solution for secure and stable interaction with the network and asset storage.

Earning money on nodes: possible sources of income

Now let's move on to the question of how much you can earn with nodes?

Rewards from projects

Developers often announce reward programs for node operators to test the load on the project, fix bugs, and stimulate user growth in the early stages after launch. Some teams reward operators retrospectively (including after a long period of time) without an incentive program.

Important. The size of such rewards may vary from project to project and does not always cover the costs of maintaining a node. As with drop hunting, this is a high-risk activity.

Transaction processing fees

A way for miners or validators to earn income. The amount of income here is also difficult to predict, since for PoW networks it depends on the power of the equipment, and for PoS — on the size of the stake. In general, the greater the investment, the higher the potential income. Only relevant for the main network.

Note. You can calculate the approximate income from mining or transaction validation using special calculators. Here are examples of such services for Ethereum, Polkadot, and Bitcoin. However, you need to make adjustments for the market situation and the dollar value of the asset.

Receiving delegation

Asset delegation is available in many PoS networks and hybrid blockchains such as Solana or Tezos. It allows users to transfer assets to a validator node operator in exchange for a portion of their income from processing transactions. For example, Solana users can earn up to 7% per annum for delegating their funds.

For node owners, this is an opportunity to increase their chances of being selected as a validator (which directly depends on the size of their stake) and, accordingly, to earn more income from commissions.

In addition, node operators charge delegators a small fee for their services. That is, the more delegations they manage to attract, the higher their potential earnings will be. Many project teams also practice creating funds that provide delegation to validators. It can be obtained for assistance in the early stages of project development and participation in the testnet. This aspect is a disadvantage in the context of decentralization, as the team directly decides who validates the network.

This is not very relevant for ordinary users, as it is difficult for an individual to obtain large delegations: you need a team, security measures, and trust from the community. But there are always exceptions.

Earning money by providing infrastructure

Since users without nodes have to rely on infrastructure providers, node operators can provide public or private access to the blockchain for a fee.

As with delegations, this is more of a case for a team than an individual user, as it involves launching a full-fledged business with all the associated costs.

Earning money on nodes: possible expenses

Like any business, launching a node requires an initial investment. Below, we will discuss the main categories of expenses.

Equipment

Home computers or smartphones, rented virtual and dedicated servers are used to deploy nodes. The higher the technical requirements for the node and the more nodes the user plans to launch, the more expensive it will be to rent or purchase equipment.

It should also be noted that when participating in early testnets, the user receives compensation only after the project is launched on the main network. During this entire period, which usually lasts from six months to two years, it is necessary to maintain the infrastructure. If a home server is used, additional expenses will be required for the maintenance of uninterruptible power supply devices, stable internet, and memory disks.

Stake

The initial investment for validators includes the stake required to launch a node. In theory, this amount is not considered an expense, as it can be returned after the node is shut down during normal validator operation.

Staking involves locking up cryptocurrency, which is subject to high volatility. In most networks, you have to wait a certain amount of time before withdrawing assets from a deposit contract. For example, in the Cosmos ecosystem, this period is usually 21 days, while in Ethereum, it can vary, but on average it is 5-10 days, depending on the network load.

You also need to consider the risk of slashing, although this mechanism is not used in all networks. Part of the stake may be “written off” as a penalty for node failures. These failures can be caused by power outages, hosting disruptions, and other factors.

Salaries

This is also an optional expense for those who plan to launch several nodes or do not intend to deploy and maintain them themselves. In this case, you will need to hire one or more specialists to monitor the status of the nodes (connection, updates, maintenance, etc.).

Important. Launching and maintaining a node also involves risks that can affect the amount of rewards and capital investment: sudden changes in market conditions, technical problems, or attacks on the network. All of this can make it difficult to receive rewards, require additional investment, or even lead to losses.

Launching and maintaining a node

Now let's move on from the theoretical to the practical part of the article. Beginners should pause at this point and familiarize themselves with the basics of how blockchain works in order to better understand the opportunities and risks that may arise when working with nodes. You will also need a basic understanding of how Linux and the command line work. If you already have the necessary training, let's move on.

Deploying a node

The first launch and debugging of a node is the most difficult stage for beginners. To simplify the process, let's break down the deployment procedure into several stages.

Step 1: Preparation

This includes familiarizing yourself with the technical requirements of the node and selecting a hosting provider. Technical requirements are usually published on the official project website or in a separate section for node operators. Here, for example, are the recommended specifications for Ethereum node hardware.

Based on this data, you can start choosing a hosting provider. This can be a dedicated server, a VPS, or an independent solution — a home server based on standard equipment or, for example, a Raspberry Pi.

The most popular option is to rent a server, as this means fewer problems and lower equipment maintenance costs for the user. In addition, hosting providers will ensure stable operation of the equipment without the customer's involvement. List of the most popular providers:

• Hetzner is a German provider with no restrictions on gigabit channels. The community has mixed feelings about Hetzner due to concerns about low decentralization, as most node operators keep their servers on this service. In addition, the use of servers for cryptocurrency projects is prohibited by the service rules, so the node can be shut down at any time. The most affordable and optimal option in terms of quality, but with risk.

• Vultr is a relatively expensive but convenient and reliable service. They give $100 per month for a referral link, so beginners can set up their first node using the bonus balance. Payment is hourly, which allows you to quickly deploy solutions or nodes for a short period of time.

• DigitalOcean is an American service, whose main advantage is fast deployment and hourly billing. They give $200 for two months via a referral link, so you can use it as an analogue to Vultr or, if necessary, as a second test server.

• Mevspace is a Polish hosting service with affordable prices for ready-made standard configurations. There are occasional glitches, but they are rare. It is best used for test networks.

• OVH is an old and reliable hosting service. It is more expensive than Hetzner but cheaper than the rest. There are no complaints from node operators, and it works great in most cases, but it is not recommended to take servers in Poland due to connection problems.

• Google Cloud is a favorite among fans of free options and experts in various fields, but it is not the best option for novice operators due to the complexity of installation. It requires skills and knowledge to operate. The main advantage is that they give $300 for testing, which allows you to maintain the node for free for some time.

• Contabo is a popular hosting service and one of the cheapest VPS rentals among its competitors. It has a good geography of data centers. Payment is made in advance for a month. Its only drawback is its slow internet speed, which can cause synchronization problems for blockchains with a block speed faster than 10 seconds.

  
  

AWS, Azure, SpaceCore, PerfectQaulity, Webtropia, and other cloud solutions are used by node operators.

When choosing a server, the first thing to do is to test the disk speeds. In most cases, the YABS benchmark, which is run with the command below, is sufficient.

The acceptable speed range is from 150 Mbit to 500 Mbit, which SSDs can easily handle. If you need higher speeds, you should look for a server with NVMe. As for HDDs, they can be used in part when launching archive nodes to store the complete history of the network.

When choosing a dedicated server, it is recommended to check the wear of the disks. You can use various programs, many use the smartmontools program, which only works with NVME disks. Install the smartmontools program sudo apt-get install smartmontools -y, view the connected disks with the command fdisk –list, and check each one with the command smartctl -a /dev/nvme1_disk_name. The percentage of wear is displayed in the Percentage Used line.

By the way, you can see what network validators use with the help of Observatory. Here is an example of Cosmos Hub.

Step 2: Install the software

To install and debug a node, you only need basic Linux knowledge and the ability to search for information using services such as Google. You will also need to learn how to use the command line. Otherwise, the instructions from the developers for launching nodes are correct in most cases, and you just need to follow them correctly. You can familiarize yourself with the installation method using the example of a Bitcoin network node here.

It will be more difficult with projects that are in the development or testnet stage — their instructions are often incomplete, or unexpected errors may occur during execution, so you will have to communicate frequently with the team and experienced operators. But in general, the principle is the same.

Step 3: Monitoring performance

After deploying the node and synchronizing the database, you will need to continue monitoring the status of the node and supporting its stable operation. The following tools can be used to track performance:

• Zabbix — a lightweight open source solution for monitoring connection and application status across a wide range of parameters.

• Grafana — a web application for analytics and interactive visualization. Provides charts, graphs, and alerts.

• Tenderduty — a tool for node validators in Tendermint-based networks. Monitors the correct operation of the validator and automatically sends notifications.

  
  

To stay up to date with news and changes, join communities dedicated to this topic and specific projects. This will allow you to quickly receive information, solve emerging problems together with other participants, and share your experience.

Node security

Once a node is launched, it is equally important to protect it from attacks aimed at blocking its operation or gaining control over it. This is a critical aspect for validators, who incur financial losses in the event of node failures or unusual behavior. Possible attack vectors on nodes deployed on Linux systems include:

• DDoS

• Brute force

• Social engineering

  
  

In a DDoS attack, an attacker sends multiple requests with the aim of “clogging” the node and causing it to crash. Basic protection against DDoS includes installing a firewall and deploying a network of sentry nodes with which the validator can communicate without revealing its address. Such nodes are constantly connected to the network and synchronized. This type of node is available in blockchains such as Polygon, Cosmos, and Sui.

Note. Hosting providers usually block such traffic and notify users of DDoS attacks (in some cases, the user's server may be blocked during a DDoS attack). However, in general, DDoS attacks on validators and even more so on ordinary nodes are unlikely due to their high cost.

Another attack vector is brute force, i.e., an attempt to gain control over a node by selecting data for access. The formula for excluding brute force is quite simple: disable root privileges in combination with a non-standard login and password. You can also install Fail2ban with a stock configuration to protect the server. Alternatively, you can create an SSH channel and connect to the server using a key, disabling the login and password connection. The protocol checks the connection using a public key stored on your computer and a private key stored on your server.

Note. If you lose your public SSH key and disable login and password connections, you will lose access to the server.

A more sophisticated way to capture a node is social engineering. This is when an operator is persuaded, under some pretext, to install third-party software or transfer their data to access the node. The most common tool is installer bots. The user is offered convenient software that will automatically deploy and configure the node. Newbies look for such solutions, but the risk is very high. We recommend avoiding the installation of third-party software under any circumstances.

For validators in Cosmos ecosystem networks

To protect and ensure the smooth operation of validators in Cosmos ecosystem networks, you can also use remote signers — software that is installed on a third-party server and used to sign blocks. Several nodes connect to such software, so even if the main validator is compromised or goes offline, work will continue through another synchronized node. The only risk is the failure of the server on which it is running. In this case, you can use Horcrux.

Horcrux is an agent that is installed on an odd number of servers (from three, i.e., three, five, seven, and so on). When using it, the private key for validation is split into several parts (according to the number of nodes), and in order for the validator to continue signing blocks, two out of three servers must remain available. This means that if one agent fails, the validator will still be able to sign blocks.

Important. Agents are not relevant for networks with short inter-block intervals (for example, Sei) because they cause delays, due to which the validator simply does not have time to sign blocks. In addition, all these tools in the form of ready-made software are only available in the Cosmos ecosystem. They simply do not exist for other blockchains.

Features of launching nodes in the testnet

Beginner node operators can gain their first experience by launching nodes in the testnet. From a technical point of view, the differences are insignificant, but it is somewhat easier and involves fewer financial risks.

When launching test nodes, one should remember that the main goal of the testnet is to conduct trial network launches, check how operable it is in principle, and form an initial set of nodes. This determines the key differences between nodes in the mainnet and the testnet:

• No initial capital (stake) is needed to launch a validator. Often, test validators are not required to provide any collateral at all, and if they are, it's in the form of test tokens, which have no real value. This lowers the entry barrier and potential losses.

• Work requirements are lower. If in the mainnet a validator is obliged to ensure uninterrupted node operation 24/7 and suffers financial losses for failing to meet these conditions, then in the testnet, no sanctions are applied for violation of the operating mode. However, this can affect the operator’s reputation, whose node may simply not be admitted to the next testing stage.

• Frequent updates. At the testnet stage, the network is still under development, so node clients are updated much more often than in the case of the mainnet. These updates do not always go smoothly — errors, crashes, “buggy” installers, and so on. In this regard, it may even be harder for beginners than in the mainnet, where everything is more or less fine-tuned and works stably.

  
  

In addition, if the user is interested in the project and plans to support the deployed node in the long term, launching during the testnet stage will allow them to identify and work through issues related to the functioning of validators and other nodes in advance.

Active participation in the testnet also allows one to build a reputation and prove reliability as a node operator. After the transition to the mainnet, it is easier for early participants to get a validator spot in the main network, delegation from the team and the community, as well as other preferences.

Conclusion

Nodes are the foundation of any blockchain. Everyone knows this, but few understand how to launch their own nodes for verifying transactions, storing data, or accessing the blockchain. Meanwhile, deploying and maintaining your own node not only provides the user with experience of interacting with decentralized networks on a deep technical level but also opens new opportunities for earning and integrating into the community.

I have gathered in this article the basic theoretical and practical information about launching nodes. A bit of patience, basic console skills, and the ability to follow instructions will help you solve 90% of the problems.